Intel is selling a controlling stake in Altera. While the company is accepting a lower value for the unit than what it initially paid, analysts see positives to the arrangement.

Intel CEO Lip-Bu Tan is moving quickly to monetize some of the chip giant’s noncore assets.

One of the first big moves by Intel Corp.’s new chief executive, Lip-Bu Tan, shows he’s moving quickly to monetize some of the chip giant’s nonessential assets.

Intel said it is selling a 51% stake of its Altera business to private-equity group Silver Lake. Analysts were encouraged by the sale, which had been rumored for months.

Altera makes a type of chip known as a field programmable gate array, or FPGA, that can be customized for a specific customer’s needs. But Altera’s revenue has declined since Intel purchased the business in 2015, according to Rosenblatt Securities analyst Kevin Cassidy.

“We see this move as just one of the many steps new CEO Lip-Bu Tan will be making to build a new Intel, and expect to hear more on the company’s earnings call on April 24,” Cassidy said in a note to clients. He currently has a sell rating on Intel’s stock.

Intel paid $16.7 billion for Altera in 2015. On Monday, it said the sale of the controlling stake valued the entire company at $8.75 billion. It is not clear yet if Intel will be taking any sort of impairment charges in relation to the sale of this stake. Intel will retain a 49% stake in Altera, which it said will allow it to participate in Altera’s anticipated recovery.

Stifel Research analyst Ruben Roy said that while Intel is seeing a loss in value in the deal, he believes the deal will benefit Intel over time.

Intel did not immediately respond to a MarketWatch request for comment about potential future charges to the company’s financials.

“We think FPGA, as an opportunity set within the greater semiconductor ecosystem, has legs to grow, but is non-core to Intel’s turnaround, so by maintaining a minority share, partnering with a key financial backer and bringing on best-in-class leadership, we think Altera is structurally better situated for improvement, which should benefit Intel over time,” Roy said in a note to clients. Stifel has a hold rating on Intel’s stock and a price target of $21.

Roy also said Intel’s intent is to work with Altera closely as a partner using its foundry business.

Intel said that Altera’s current CEO, Sandra Rivera, will step down and be succeeded by Raghib Hussain, who most recently served as president of products and technologies at Marvell Technology Inc.

“We believe Raghib Hussain, who has recently announced his departure from Marvell, could be the right leader to turn Altera around over time,” Rosenblatt’s Cassidy added.

Intel said it expects to deconsolidate Altera’s financial results from its own. In 2024, Altera generated revenue of $1.5 billion and had a GAAP operating loss of $615 million. In 2014, before Intel acquired the company, Altera reported annual revenue of about $1.9 billion, Cassidy noted.

Tan made his first public appearance as Intel CEO earlier this month. He urged customers and partners to give him feedback on the overall business.

Shares of Intel rose almost 3% on Monday.